When entering invoices in V5 - all ITEMS are automatically taxable even
when a customer is identified as non-taxable.
Is there a way, when a customer is NON-taxable, for all ITEMS to be
defaulted as non-taxable? Or must we continue to
to change all ITEMS as non taxable for every item on every invoice for every
Thank You, in advance, for your response!
Not sure what state you're in, but our state taxes are designed that
the individual or business entity is what is exempt not the item, with
the exception of food. Food items are non-taxable.
The only time you would set up an item is non-taxable is if it truly is
non-taxable. There's no need to make your items non-taxable for exempt
customers invoices. The program will look at the taxable status of
that customer and will not charge tax if they are set up as exempt. If
you haven't already done so, set up a tax authority with a 0 amount and
a tax code (exempt or resale, etc) using that tax authority and then
assign this tax code to the customer on the general tab. This will
ensure that you don't have to change anything when you invoice this
Hope this helps :)
Thank You for your reply!
I guess my issue lies with the reporting properties of exempt customers
items being reported as taxable sales.
It appears as if this $45.00 sale should have had tax collected, when in
fact it was just entered as a taxable item for an exempt customer.
Sure confuses bookeepers. (see report)
Back in the DOS days, an exempt customers items were all exempt, unless I
Maybe its just my opinion items should be handled this way, & PT simply
cannot default exempt customers items as non taxable. It sure would be nice
Thank You for your time!
Authority ID Authority Description Tax Rate Taxable Sale Tax Amount
Exempt Sales Total Sales
001 Texas Exempt 45.00 45.00
001 Texas Exempt 2,625.15 2,625.15
001 Total Texas Exempt 45.00 2,625.15 2,670.15
00TEXAS TEXAS 8.25000 6,304.25 520.09 6,304.25
00TEXAS Total TEXAS 6,304.25 520.09 6,304.25
This is the way it works in all states. (I've set up sales tax for 40
states for clients). Some states require reporting on the taxable items
sold to exempt organizations, usually totaled by the reason (resale,
When you report several states, it is sometimes useful to send an
electronic file to complete the quarterly sales tax reports, and then
you need to know the entries for exempt sales. If you 'simplify' and
don't report these, you lose more than your 'savings' when you get
audited. Sales tax audits are worse than IRS or those for state income.
I have wondered about the complexity of the large inventory systems
used by companies like Sysco Foods. As a hotel or restaurant, we are
tax-exempt for purposes of resale for consumable items (food) and for
related supply items (styro cups, guests napkins, to go containers) but
not for paper products used in the preparation area, or cleaning
supplies. But a tax exempt organization (a charity for example) would
be tax-exempt for anything they buy for the purpose of the
I know as the customer, I am a stickler for the vendor getting it right
about what my company should be taxed for .. it is all very convoluted.
Glad I am not the programmer.
but consumables and inventory are fungible. If you take an item out of
inventory for your use, then YOU must report that on the sales tax
form. It IS nice if the vendor can determine by the type of item:
paper towels vs. bacon, if it should be exempt for your restaurant.
(I'm just saying the vendor can't do it all.)
Yes, people like Sysco likely hire the big consulting firms to set it
all up. The typical [customer x item] is confused by this very issue.
As this one item, paper towels, IS exempt if the buyer resells paper
towels. That's why items have classes.
When I do the set up it is usually 20% of what the big firms charge. A
friend in a big firm said their fee was $60 - 100,000, for a mainframe
system (not Ptree). But they were talking multi-state and multi-item.
My smaller clients usually just have to add one state, like MD or NY.
One is cheap, the other takes a few hours if products are already set
up the right way.
If you sell something like software maintenance, then you'll really
have fun, as each state can be different. I think it is MI that
charges 25% of the normal sales tax if software maintenance includes
bug fixes and telephone support. If it's just upgrades and can be
delivered on media, then 100% of the tax rate. CA exempts food, but
charges for carbonated water.
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